Why Tether Said NO to MiCA | Exclusive Interview with Paolo Ardoino
Paolo Ardoino, CEO of Tether, explains why the company rejected the EU's MiCA stablecoin license. He argues MiCA's 60% uninsured cash-deposit requirement would harm Tether's 400+ million users, especially in emerging markets facing currency collapse like Turkey's lira down 80% in five years.
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As a CEO, I've been called crazy to decide to not apply to MICA. MICA license is very dangerous when it comes to stablecoins. I need to protect the 400 million plus users that we have around the world. They are not as lucky as Europeans. If a regulation does not allow to do that, we have to renounce to that market. That is the decision that every CEO has to make. Yeah, first time I went to the United States is this year. I'm honestly I'm very excited because now the US that is the most powerful country in the world is in the process of regulating a technology that tether created in 2014. So we are grateful, I think that we are seeing a lot of progress in our discussions with US stakeholders. The reason why I'm there is to explain why the technology that we created so many years ago sure is interesting for United States. But the reality is that people the United States have hundreds of ways to pay each other while people in the emerging markets, developing countries, they are struggling to just holding their national currency. That is devaluating very fast against the US dollar. Think about the Turkish lira, the Argentinian pesos and so on. So the Turkish lira lost 80% of its value against the US dollar in the last five years and the Argentinian pesos lost 90 plus percent of its value against the US dollar In the last 10 years. So all these people are turning to USDT. We have more than 400 million users in these countries in the emerging markets and we are growing. We grew 46 million wallets in the last three months in the last quarter. So we are the living proof that stablecoins are the way to go for the emerging markets are also very helpful to bring the US dollar Gemini to the next level and push back against the de dollarization push of the brics. Countries that are actually building infrastructure and bringing new types of currencies to try to undermine the US dollar in Africa, in central South America and so on. So I think that there is the last stronghold for US dollar hegemony. And that's something that I believe in the US is not very well understood and needs to be understood very well. While they are crafting the regulations, the aim is to get to 42,000 bitcoin, then go beyond that, ideally to infinity. The infinity, just to be clear, 21 million. I think that this is a very exciting new company. I think stars align there because this is the first time SoftBank is doing anything meaningful in crypto space. But in general, more precisely in the Bitcoin space then you have tether. We are huge investors in bitcoin ourselves. We have more than 100,000 bitcoins ourselves. Then you have Kantor that has the widest institutional access that you can dream about. And I think it's very hard to find another CEO like Jack Mallers. He's so perfect, so fresh, so intelligent when he speaks about bitcoin. And so I think these four ingredients are making the best pizza when it comes to a bitcoin led treasury company. And the aim is to not only build a bitcoin first company that has a very important target that is maximizing the bitcoin per share for investors, but at the same time is also doing education and explaining why, you know, bitcoin and in balance sheet for companies makes sense and is actually a protection against all the craziness that is happening in the world. Like you can imagine, tariffs, inflation and all that, right? So we have a long term plan for 4, 21 that is just not about like maximizing the interest in the company but actually doing good work and good education around the world. I think that is all depends on the risk management of the company. I know that 10 to 1 aims to be very conservative and very strict in terms of risk and exposure and leverage. So that's the beauty of it, right? So I think that mostly detractors are speaking about oh, if Bitcoin drops 10%, their seller has an issue. I think that they don't understand exactly how everything works and the proper risk management that is behind a bitcoin play. And funny enough they, you know, they think that bitcoin treasury is risky while they keep their money in banks that do fractional reserve at the pace of 90%. And so, you know, it's almost entertaining to hear that as a CEO I've been called crazy to decide to not apply to Tumica. The reason is not fear of regulations, fear of compliance. We are actually, we are regulated in El Salvador. The prominent that I had with MICA is that MICA license is very dangerous when it comes to stablecoins. And I believe that is even more dangerous for the small medium banking system in Europe. I think that what will happen in the next years is that few banks in Europe will go belly up because of the requirements of the mica license of 60% of reserves has to be kept in uninsured cash deposits in European banks. Imagine like the quick back of the envelope calculation you have. Imagine that Your stablecoin is 10 billion euros. You have to keep 6 billion euros in European bank multiple Banks and UBS is not or the big banks are not banking stable coins. So you have to turn to small banks in Europe like five small banks at least in Europe that in order to keep those reserves because also there is a constraint in how much you can keep in each bank. So you have to find fine small banks in Europe that will keep 6 billion euros. So you keep there 6 billion euros. And what will happen is that this bank as uninsured cash deposits, these banks will take these euros and will lend it out because they can do a fractional reserves up to 90%. So means that 5.4 billion euros will be distributed to people that want to buy a car, a house and start a new business and all that. And 600 million euros will be capped by the banks. So imagine that you have a 20% redemption, so you need 2 billion euros back. You go to the bank and they only have 600 million euros. So the banks will go bankrupt because they cannot fulfill your requests and you as a stablecoin issuer would go bankrupt. So I think it's a very not well thought legislation. I'm all for legislations, but they should be intelligent and it should be carefully designed to protect the consumers. So yes, I decided to not apply to the MICA license because I need to protect the 400 million plus users that we have around the world. They are not as lucky as Europeans. I love Europe, but I think that unfortunately European Central bank is more interested to push the digital euro as a way to control people and control like how they spend their money rather than actually looking for the best interest of their its population. While we have hundreds of millions of people outside of Europe that need to have a payment system because what they have in their lives is not very useful because it's just based on their national currency that is devaluating very fast against US Dollars, against Bitcoin, against gold and all that. Right. So I need to be true, I need to protect those people even from bad regulations. Well, I think that there are different euro offerings. We invested stellar in grassroots euro stablecoins and I think that the sent European Central bank anyway want to push for euro based stablecoins. I think that was some article or press release from the European Central bank that was actually calling out the fear that they have in dollar backed based stablecoins. You know, funny because they were calling out US based stablecoins as if that was the main issue for the reason why Euro as a currency is actually failing. Kind of funny that they're pointing the fingers to the US Dollar based stablecoins rather than they're, you know, looking at inwards. But you know, European exchanges, I think they will do fine. We are supporting them with Hadron, that is our tokenization technology to provide them alternatives with the grassroots Europe based stablecoins. I'm a bitcoiner, right? So I believe that it's important to protect the right of people to have to hold strong assets that are carefully designed to maximize their safety. That is the issue again that I had with the MICA license for stablecoins. I know our competitors decided to apply to it, but they are the same competitors that had $3 billion in uninsured cash deposits in Silicon Valley bank in 2023. They almost died. Then FDIC had to step in to savvy the bank. So they were saved. But you know, that is not a good example of compliance. I mean compliance should be done and it's very, very important. But when regulations are sensible, otherwise, you know, again, there are very few CEOs that you know, sorry for my French, but has balls to decide to not to renounce to 600 million people but for the benefit of 3 billion people that do not have any other alternative and they don't have the lack of Europeans to have three credit cards and bank accounts and so on. Right? So Europeans, I mean again, I love them, but it's not their fault. But simply the regulators did not understand very well the problem and how to solve it properly. Actually, I was present in many discussions where we were advocating as tether to require to have 100% of the reserves in Treasuries, like in bonds issued by the different nations. But on the other side, our competitors were actually pushing for 100% in cash, like they never learned from their mistakes. So turning back to the US dollar, stablecoin, we want to hold as part of the reserves of Tether the best assets that we can. And if you are a dollar stablecoin, you should be able to hold US Treasuries and you should be able to hold Treasuries that in short maturity debt can be converted back very quickly to cash. This is the expectation of the users of Tether. And that's what we do. And if a regulation does not allow to do that and like the European regulation, that we have to renounce that market. I mean, we are very good friends of Rumble, right, the media streaming platform. And they decided, I mean, for example, France asked them to block and offboard certain content creators and decided to not serve the French market. And they decided to shut down Rumble in France. I mean, if you are a company, you have to decide if you want to, you know, protect freedom of speech and financial freedom while complying with lawful requests and law enforcement. That is something that Tatar never turned down, just to be clear. Request from law enforcement. Right. That is very important. But we prefer to announce to a customer base if that means that all our user base will be more affected and will have a weaker product. And I'm very, very careful and very strong in opinion on this point. It's just inevitable, I would say, I think that companies and the nation states has to acquire Bitcoin. Now I was looking at central banks, especially from the BRICS countries acquiring large quantities of gold. But I can see that just as a time mismatch. I think that now of course they have been used to gold for the last 5,000 years. So that's what they know and that's what they are more comfortable with. And also people and companies are doing that. But I think in the medium to long term that the more bitcoin education, the more know companies will set the example. Certain small companies, well, not small, but the first like pioneer companies will set the example in bitcoin treasury, then others, everyone else will follow. And now it's never too late to buy bitcoin.
